The WORST Mortgage EVER!!
The WORST Mortgage Experience Ever?
Mr. and Mrs. First Time Home Buyer…the Newly Weds!
This story surrounds a poor fellow and his new wife that were pre-approved to buy a new home from their local bank branch. The very young, about 20 years of age or so as the client puts it, but very polite loan officer sent them on their way with an approval for around the $300k mark – after a short get together in her office.
I forgot to mention – this took place back in the “Bidding War” Days in 2007 when the market was really hopping…in REGINA, SK. Here, in point form is what happened:
- Pre-approval with local branch (with little Ms. Mortgage Specialist): Approximately $300k
- House hunting for 2 – 3 weeks
- Found several houses they loved
- Put in multiple offers (even with bids above asking price) and none of them were accepted.
The Real Estate Agent told them it was because they kept putting in “Conditions of Finance”. The ALL POWERFUL AND ALL EDUCATED Real Estate Agent (…ummm, in case you missed it that there is sarcasm) convinced the young couple to submit their next offer above asking price with NO Conditions…No Home Inspection, No Gas Line Locate, No FINANCING Conditions, etc. - So…they did just that. They found a house listed for $235k and at their Real Estate Agent’s advice, and the comfort of knowing they were Pre-approved at their Trust Worthy Bank…they put in an offer for $280,000.00 with No Conditions.
-Their offer was accepted!! DUH!
- A large deposit was put down on the home.
- Happy to have finally found a home and have their offer accepted, they went back to local branch to see the loan officer.
- Wouldn’t you know it…the young fresh faced gal was gone…no longer working at the Bank.
- No Problem! The clients were simply introduced to a new loan officer!
- New Loan officer looked but couldn’t find the Pre-Approval…so took a new application…a formality they were told.
- DENIED! NO MORTGAGE FOR YOU! (Guess they shouldn’t have asked for any Bread…hahaha – good old Seinfeld references…they never get old!)
- WHY you ask? Well, it turns out that the husband had an “over draft” on his Account with a small un-paid balance (about $200.00 according to the client) from when he was a Student attending university in Saskatoon in 2003. It had evolved from simply being an over draft and was turned in to an automatic DEFAULTED LOAN, and was sent to a 3rd party Collection Agency for recovery! It was never recovered –
as he had never been made aware of it he says. Before he left the Bank that day, he paid it off.
- But that’s not all…the original loan officer (you remember her…the 20 year old Mortgage Specialist with YEARS of Home ownership under her belt and plenty of financial experience….you guessed it, more sarcasm) she failed to SEE this as she apparently looked at an old credit report that was on file rather than pulling a current one! GASP!
- “The Hits Just Keep On Coming”…the clients had borrowed their down payment from their parents – and had used most of it for the deposit.
- After leaving the bank, they immediately contacted their most trusted Real Estate Agent to get him to stop the deal. He said they would “forfeit their deposit and could be taken to court for failing to hold up their purchase agreement and for causing the Seller’s unnecessary hardship for taking their home off the market! “
- Unless they could come up with some way to get new financing arrangements. FYI…Only 1 day had lapsed (a Friday at that)…imagine the hardship of those poor seller’s in the midst of a HOT Market with Multiple Offers over the listing price coming in on every home on the market…my heart breaks for them.
- Moving on, the Real Estate Agent scolded Mr. and Mrs. Newlywed for “wasting his time and for coming to him with a FAKE approval.” -
You think it can’t get any worse don’t you…well it does
– they told the Agent they were not happy being scolded like children and they were going to use someone else…”Not So FAST!”
– they had signed a Buyer’s agreement…they were over a barrel
– they were obligated to complete the sale with him.
- The clients, already having borrowed money from their parents, told them the story…they had no other options; they asked their parents for their help. LUCKILY, there is a happy ending
– the parents had worked with me (Jason) before I opened FOCUS and they called me on my cell phone to see what I could do, if anything. To answer your question, “YES”, I saved the day.
It was the Saturday of the Labour Day weekend when I took the call
– for those of you who know me…you would be right to assume I was sitting in my boat-fishing…and enjoying a cold and frosty beverage (once again, I will say no more – lest I incriminate myself!). I spoke to the parents and listened to the story. It sounded fishy to me (yes – I admit it – that poorly placed pun was definitely intended!).
I made arrangements to meet with the clients the following morning. On the following Sunday, I got up – drove back to the city (in my hot rod Plymouth Breeze!!) and I met with the kids and their parents.
Well of course they came to FOCUS!! Did you really think it would have ended any other way? Come on…it’s no secret – we are pretty much the best there is at what we do! In the end, I managed to complete the transaction for them. It was really quite simple. They even got a better rate than their Bank had pre-approved them for!
So, how did I do it? Like I said, it was really quite simple.
First, I know the Mortgage Rules.
Secondly, I know what my lenders will and won’t look at.
Third, I knew I could set up a contingency for the Parents to buy the house as a 2nd home if necessary.
Lastly, and perhaps most important, I used a little thing I like to refer to as “COMMON SENSE”. It was painfully obvious that Mr. Newlyweds past transgression was an isolated event. I simply explained it to the lender – and the rest is history. That’s all for today!
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